Friday, September 30, 2011

Bank of America claims to be instituting a $5 a month Debit Card fee in January. What is behind this, and should we care, as consumers?

The recent news headlines are blaring about Debit card fees to be imposed by BoA in January. I have been a big fan of Bank of America as, from a consumer point of view, they can be a very useful bank to have.

Since they are large, they are everywhere. So if you travel around the country, you can access your money and do business in nearly every State. So it is convenient.

And so long as you don't do povery-think tricks like bouncing checks and creating overdrafts, or using 3rd party ATMs to take out $10 to buy ciggies and gas, they are a good bank in that they don't charge a lot of fees. People who "hate" BoA are often stupid people to bounce checks and get into trouble and then whine when they discover that banks charge bounce fees. But all banks do this - and singling out BoA for abuse only serves to highlight the stupidity of the consumer, not the bank.

As I noted before, if you put $25 a month into your savings account, your checking account is free. Not bad. In the last few years I have banked with them, I have yet to pay a single banking fee - even for paying bills electronically, which often costs them 44 cents in postage.

But all of that is about to change, it seems. And $5 a month to use a debit card is $5 too much for me.

Why are they doing this? Banks previously got 44 cents from retailers for every debit card transaction. for some reason, this is being reduced to 22 cents, a 50% reduction in their cash-flow. If you run your debit card as a credit, however, the bank gets a hefty percentage of the purchase price - usually 2% or more. So debit cards can be very profitable - if run as a credit, not a debit.

And for this reason, many banks offer frequent flier miles or other "kickback schemes" on debit cards, to encourage users to run them as credit cards, not as debit cards, as the bank makes more money this way.

But regardless of the backstory, what is important to the consumer is the overall effect to their bottom line. And if we have to pay fees for using a debit card, this is a very slippery slope to be traveling down, as it will open the gateway for more fees down the road.

At this juncture, the consumer has three options:

1. Write checks. Checks are still free, for the most part, at BoA, although you do have to pay to have checks printed.

2. Use a credit card and then immediately pay it off using BoA online bill payment or "pay my bill" on your credit card website. This is fine, but runs the risk of you developing a credit card debt over time.

3. Use your Debit card only as an ATM card, and take out and pay cash. If the card is not used as a debit card (run as debit or credit, it doesn't matter) no charge is made. But once you make even one purchase a month, the $5 fee kicks in.

4. Switch to another bank which does not have this fee structure.

For me, I think the answer is #4, unfortunately. I have been a big fan of BoA, but perhaps our relationship is finally drawing to a close. They have a great online website and a great network of ATMs. But I am not going to stick around and see my wealth dissipated in more and more bank fees.

Perhaps BoA needs to instead look at its bloated cost structure - excessive branches and offices with redundant tellers - and think about CitiBank's model instead - using teller-less ATMs for most transactions, and cutting the number of branches.

Regardless of the reasons behind the BoA move, you have to analyze this from a consumer standpoint. And monthly fees make no sense at all, so long as other banks offer free checking and free debit cards.

This move is doubly disappointing for me, in that I had hoped BoA would turn around in the next year. I had bought BoA stock, thinking that, with such a great infrastructure, they could overcome their Countrywide Mortgage debacle and eventually emerge as a key player in the banking industry.

However, this fee model might just drive away a lot of customers in their customer base. I am not sure how it will allow them to succeed in the long run.

Rampant inflation in Germany in the 1920's made the Deutschmark worthless. It was worth more as fuel than as money. Even "mild" inflation of 10% or so can cause great economic distress to ordinary citizens. Why are some people advocating this as a solution to our economic problems?

Inflation can wipe out a lifetime of savings and also put a wrench into the most carefully crafted retirement plans. Are we headed for a period of inflation? It appears some folks think we should be.

In the press lately, we are being told that what we need to fix things is inflation. I am not sure how this works, frankly, and it scares me to death. The last major recession we had in the USA in 1979 was marked by high inflation - in the double-digits - as well as high interest rates. Mortgages back then were as high as 14%, which depressed home prices. The high cost of everything meant people spent less, and jobless rates climbed to well over 10%. Inflation is a good thing? I think not.

Inflation fans argue that if you ratchet up inflation, people will consume more. They argue that if prices are going up, people will buy more things NOW on the premise that they will be more expensive down the road. This, I think, is an idiotic argument.

Most of us don't rationalize purchases this way. If we need a car, we shop for one on price and features and make what we hope is an informed decision. Or, at least rational people do this. Many, many more just drive by a dealer, see something shiny, and then go in, talk to a salesman and get talked into trading in a serviceable car for something they really don't need or want - on a whim.

Either way, most folks don't rationalize inflation into the deal. I cannot think of anyone in my lifetime saying, "Gee, I should buy a new Impala today, because the prices are going up next month!".

And I think there are two reasons for this. First, as consumers, we do not perceive inflation that directly. While we notice prices going up over time, this is in the form of a backward-looking model, not a forward-looking one. So we say, "Gee, a hamburger at McDonald's used to be 50 cents" but we never say, "Gee, next year, the hamburger at McDonald's will be a dollar-fifty". We cannot perceive the future as clearly as we do the past.

The real reason some folks want inflation - including perhaps, the government - is that it allows you to pay back debts at a lower effective rate. If you owe someone $10,000 (enough to buy a cheap car) and have to pay it back, and then rampant inflation drives down the value of the dollar to the point where it barely pays for a cup of Starbucks coffee, then you come out ahead. You borrow a car and pay back a cup of coffee.

Debtor nations tried this technique over the years, most notably Wiemar Germany and in the 1970's, Argentina. Inflation rates of 1000% or more devalued the currency and wiped out nearly everyone's savings portfolio. And of course, it ruined the economies of both countries.

In the late 1970's, during the Carter administration, we had an effect known as "stag-flation" where the economy stagnated and inflation rose. High inflation and high interest rates meant that everything became more expensive, so people consumed less, not more.

And that, I think, is the problem with the "we need inflation" argument. Inflation is often a symptom of a growing economy. But it is not the cause of it. The inflation hawks think that if you have inflation, you have a growing economy. So if you cause inflation, this is akin to causing the economy to grow. And it is a flawed argument, as it places the cart before the horse.

It is akin to the bed of ice they put me on as a child, when I was ill and they needed to get my fever down. Reducing my body temperature prevented the fever from killing me, of course. But it did not, in and of itself, cure me of the illness I had. It merely altered a symptom of the illness. In a similar analogy, it is like the cold medicines people take, which alleviate the symptoms of a cold (runny nose, aches, pains) but of course do nothing to kill off the virus that causes the cold.

And perhaps the inflation hawks are taking too much cold medicine to see this. Cranking up inflation at this point in our economy is akin to the Republican's efforts to cut spending. It will cause nothing but more and more hardship. Cutting spending will put more people out of work, cause more houses to be foreclosed upon, and cause more economic hardship for workers. Cranking up inflation will wipe out or reduce the effective savings of the booming retirement and near-retirement segment, and also cause hardship for workers, as they struggle to pay more for basic needs, with the same amount of income (or less).

So why are some people advocating this as a solution to our economic problems? Well, it isn't hard to do, first of all. Just print more money. As you print more money, you increase the money supply, and like anything else, the law of supply and demand applies to money. So with more money in circulation, the less it is worth. And as I noted before, money is just an idea, not a physical thing. And when you start printing more and more money, well, the idea of money becomes devalued. People start to think of it as worth less and eventually, worthless.

Inflation also acts as a uniform tax on the assets of everyone. Well, almost everyone. It really taxes the snot out of the poor and middle-class. If inflation surges to 10%, then your portfolio is effectively decreased by that amount - as is your income. If you are facing retirement, this is a scary scenario, as your savings may turn out to be woefully inadequate over time. So we pay back the Chinese with worthless dollars, but in effect, what we are doing is robbing everyone who owns dollars to do this.

And like I said, this affects nearly everyone. Folks who can afford to do so can move their money into other areas and try to avoid inflation. They can invest in other currencies, or indeed, even minerals or other commodities (which perhaps explains the fascination with Gold these days - and why the last gold boom-and-bust occurred in 1981, when inflation ran high, and then dropped). During the heyday of the Argentinian inflation crises, it was said that people spend a significant amount of time every day moving their money around from bank to bank, trying to get the best interest rates, to prevent what little they had from evaporating in their hands. People who cannot afford to do this - or don't have the sophistication to do this - end up broke.

So the rich can afford to find shelters against inflation, while the middle-class and poor just get screwed. Sounds like a swell idea, if you are a billionaire.

And it seems to me that we are seeing the early stages of inflation taking place. More and more people are striking for higher pay, and prices of basic commodities seem to be going up. Of course, the price of oil often drives all of this. The inflationary recession of 1979 was "solved" by cheap gas prices of the 1980s. The recession of the early 1990's morphed into the economic boom of the late 1990's and early 2000's - which were all fueled by cheap gas. Owning a 2-mpg boat made "sense" in the late 1990's when gas was under a dollar-a-gallon (remember those days? They didn't last!).

The current recession is caused by a lot of things, the housing bust being prominent. But $5-a-gallon gas and continued high gas prices are one factor that is overlooked. Spending cuts in the name of budget-balancing, as well as inflation, will extend the current recession, which for some folks seeking office, is a fine and dandy thing.

You can't persuade people to change governments when things are going well. So one way to get people to vote for Communism or National Socialism, is to intentionally wreck the economy, to get people riled up for a change in leadership.

So the next time your 401(k) tanks 20% because Congress can't agree on a budget for spending or on a debt ceiling, think about who is causing this sort of problem, and what their real agenda is. Because, chances are, they don't have your real interests at heart.

It seems to me the Republicans are hell-bent on wiping out what pitiful little I have saved, by creating instability in the markets and by downgrading national debt - and by fueling inflation. And as a "cure" for our debt problems, they propose cutting back on the only other retirement options I have - Social Security and Medicare. Homelessness, it seems, is not such a farfetched future for many retirees.

Why would anyone, in their right mind, vote for a party that is trying to destroy the middle class so completely and utterly? Because they can't stand a Black President? It makes no sense to me, whatsoever.

Desire to inspire us on this fantastic opportunity Tip of the Brazilian architect Mauricio Arruda in the city of São Paulo. With plenty of light, plants and other bizarre additions (see the dining table!) Mauricio brings life in the apartment. We believe this is the kind of space that will bring a smile to someone's face. What do you say?

Wednesday, September 28, 2011

Inexpensive Kayaks like this model purchased from Boat U.S., are easy to paddle, stable, lightweight, and affordable. More expensive Kayaks are often less fun, heavier, harder to use, and less stable. For most people, going to expert-level equipment is just a waste of money and a means of decreasing, not increasing, enjoyment of a sport.

We are renting a lakeside house in Camden, Maine, which is pretty affordable ($2500 a week) at the end of the season, and when you divide the cost by three couples. And we are enjoying an Indian summer and great fall foliage. The lake is placid and calm, and there is a picnic island in the middle to Kayak to. So why not get the whole gang out on Kayaks and have a champagne picnic on the island?

That is what we did. But the experience was an eye-opener. We have been Kayaking across maritime Canada for the last two months, using inexpensive ($350) Kayaks we purchased years ago at Boat U.S. These are by no means "serious" Kayaks at all, but, as the advertising label on one notes, "Suitable for bird watching and family fun". They are very light - one person can carry them and put them on top of the car - and that is a handy thing. And they are indestructible, being made of a molded plastic.

And they are easy to paddle, and since they are wide and have flat bottoms, stable and easy to use. And for most people, this is all you need - or want. These are similar to the Old Town Kayaks we had previously (bought at the annual Labor Day Sale in Old Town, Maine, for $200 apiece, years ago) although those were much heavier and harder to carry. But those were wide and stable and had no moving parts to them.

At the rental house, they have a number of "ocean" Kayaks that are nearly twice as long - and half as wide - as our cheap Kayaks. These are "serious" Kayaks, with rudders and elaborate steering mechanisms (mostly broken or in poor repair) and cargo compartments fore and aft (most never having been opened in years, with dry-rotted straps). They are heavy as all get out and take two people to lift. They are expensive ($800 or more, even used) and when you put them in the water, well, they are tippy as all get-out.

Trying to get our friends, who have never Kayaked, to use them was a challenge.

This is a more serious Kayak, but it is also more tippy and very hard to get in and out of, due to the small opening. It is also longer and heavier and has an elaborate steering mechanism. And of course, it is far more expensive. Is this better? Not for most folks.

They did have one advantage over our "lame" Kayaks, and that is they were faster. Since efficiency is a function of hull speed, these longer and narrower "serious" Kayaks glided through the water with less effort. However, for a jaunt around a small lake, it really isn't much of an issue, and the point of Kayaking is to get exercise.

Many folks like to use fiberglass Kayaks, which often have white hulls with yellow tops. These are also narrow, but lightweight. But since they scratch easily, they cannot be dragged over the rocks like the polyethylene cheaper models. As a result, the owners often carry these in elaborate sock-like covers, and have to carefully lift them into the water - and back out again - to avoid scratches. Fun, eh? Even worse are very beautiful, but impractical, wooden kayaks, which look very cool on the roof of your car, but are fragile and easily damaged on rocky shorelines.

And yes, people who use such Kayaks often turn up their noses and refuse to even make eye contact with, much less talk to, people like us in our floating buckets.

This lovely hand-made wooden Kayak would look great - hanging from the ceiling of a vacation cottage as a decoration. As a practical Kayak for daily use, I would think it would be less than practical. Dragging this Kayak, even on sand, would damage the beautiful finish. I think people have more fun building these types of boats than using them.

Many young "dudes" tend to buy very short whitewater style Kayks, which are turned up on both ends and look like little elfin shoes. These are often so thin that you can see through the thin fiberglass, although most are more practical polyethylene. These type seem to spend more time sitting in the corner of a dorm room than actually traversing white-water rapids. But they do announce to all your friends that you are a serious whitewater dude!

Looking more like an oversized shoe than a boat, these whitewater Kayaks are really only for serious Whitewater rafting. On a calm lake, they are less than useless, as they are not very directionally stable. we went Kayaking with someone who had one of these, and they kept spinning in circles. The ultimate Kayak for one application is often the least useful for another. But having one of these in your dorm room, or bolted to the roof of your Subaru, marks you as a serious Kayaking dude!

While such Kayaks might be useful for limited circumstances (well the whitewater kind, anyway. I am not sure what the point of a $2000 Kayak that you can never, ever scratch, is) for just general paddling around, they are not only overkill, but less useful.

It is, in a way, like the scenario I described in The Bicycle Trap, where people spend thousands of dollars on racing bicycles for street use, that are actually less useful than more pedestrian bikes - at least in terms of recreational riding on real streets and trails. Or the gourmet kitchens with their high-end appliances which are less reliable than a cheap model from Sears. Our generation, it seems, is hooked on paraphernalia, and we all want to have "top of the line" stuff, even if it is wildly impractical for daily living.

A Ferrari or Porsche is a fine racing machine, but as many owners discover, very esoteric, high-end cars are not very practical for daily driving in heavy traffic. 500 HP is not going to help you out of L.A. Freeway traffic jams, and hard-butt racing seats get pretty old after a few miles. It may be the "ultimate" ride, but you might find that the guy in the next lane in the rented Impala is actually having more fun and more comfortable (and has a place to put his luggage).

Not surprisingly, these Kayaks at the rental house were covered with dirt from sitting in the side yard. They had not been used much lately, and no doubt the owners discovered that moving these heavy monsters, wedging into the tiny, uncomfortable compartments, and dicking around with rusted steering cables, was more hassle that it was worth. I think they would enjoy a cheap "lame-ass" Kayak a lot more - and save a lot of money in the process. After all, they live on a small lake that rarely have any chop on it.

But of course, in America, we all have to become "experts" in what we do, so we all go out and buy this stuff. You can't even walk today without some sort of special shoes and ski poles, and even lessons (I kid you not). I haven't needed walking lessons in 50 years, and I am not going to start now. But for many folks, even taking a hike is no laughing matter, but something that requires that you be kitted-out in fancy and expensive gear - and something that be taken deadly seriously and very competitively. It sucks all the fun out of it!

But the rise of creeping expertism, I think, serves to do little than to induce consumers to spend money - or spend more than they should - and to suck the joy out of any sport or endeavor. By definition, most of us will never become experts in any given sport or endeavor - nor should we. The idea that one can excel in everything they do, is inherently flawed. If you are a recreational skier, you will never become an Olympic contender, unless you devote your life to the sport. Buying all high-end gear will not make up the difference.

Similarly, the best golfers are not the best because of their fancy clubs, but rather because they golf a lot - and have some natural talent for the game. Buying hyper-expensive golf clubs, as an amateur, is not going to improve your game much. Golfing more, will. But the expensive clubs are impressive to look at - and let's face it, that is sort of the point of buying them - to impress people we don't know.

Of course, this can all backfire horribly. The fellow with the shiny new set of expensive clubs who whiffs the ball off the first tee, is sure to get chuckles from the Plumbers and Carpenters in the next foursome, who blast the ball off the tee with their mediocre, but battered golf clubs. After all, they play nearly every day, at 4:00, provided it's not raining. The lawyer with the pricey clubs rarely has time to golf, unless he is schmoozing a client.

Or consider the "serious" bicyclist, with the $5000 carbon-fiber bicycle and spandex bike clothing (with advertisers logos all over it) who is pedaling down the road in the wrong gear, with the seat too low, the front wheel wobbling side-to-side. Clearly, he or she doesn't know what they are doing, and the fact they are 60 pounds overweight emphasizes this point. But the salesman at the bike shop was certainly persuasive. They probably would be happier and better off with a cheap mountain bike from the chain sporting goods store - and be more likely to use it, as well.

And that is the other problem with expensive gear. People buy this stuff, pay a lot of money, and kid themselves they are going to become fans of the sport or activity. But since the racing bicycle is no fun for recreational riding, and the high-end Kayak is no fun for putting about in the water, they end up languishing in a garage somewhere. And as a result, the person with all the good intentions and the checkbook, once again feels guilty that they have yet to follow-up on yet another project. So the recrimination and low-self-esteem engine is fueled yet again, priming the individual for the siren song of the next salesman or next trend or activity bandwagon to jump on.

Another problem with amateurs buying expert equipment, is that it tends to dumb-down the equipment over time. Many folks buy high-end stuff, figuring it is "better" when in fact, it may be merely more esoteric and suited only for special applications. When the Z28 option package came out for the Camaro, it was designed for Can-Am racers who needed a package of options for that 5.0 liter class of racing. Air Conditioning was not even an option on such cars, early on. But over time, people got the idea Z28 RPO option code was the "ultimate" Camaro, and thus insisted on owning one - and demanding things like automatic transmissions, air conditioning, and power windows. Before long, the Z28 devolved from a factory race-car to an overloaded pimp barge.

So, what did I learn from this experience?

1. More expensive is not always better.

2. Consumer grade products are often best - for consumers.

3. Expert products should be left to experts.

4. It is OK, and in fact, normal, that you will not be an expert in every endeavor in your life.

5. This does not mean you can't have fun at other levels of skill.

6. People who are experts at sports may in fact have less fun than you.

7. People who try to pretend to be experts by buying fancy crap will very likely have no fun at all.

8. People who try to make everything into a competition of expertism are no fun to be around.

We have been Kayaking three times here so far, and we have had fun. But I've had to lend my "lame-ass" Kayaks to my friends, as they are easier to use and more comfortable. The "serious" ocean-going Kayaks are OK, but a lot less fun to use than our cheap ones.

Monday, September 26, 2011

Looking for a pink room design for your growing girl and becomes a teenager? Well maybe we can give you a hand today. Here we present 10set rooms girls. Rose honestly not a popular color, but for girls, they love it. Here you will be fascinated how pink can be so delicate with colors like orange and red also available. The interiors here are practical and capable of meeting the needs of girls. Complete with jobs, small libraries, shelving systems to accommodate the collections of DVDs or CDs, and they are all specifically designed just for teens. So how do you think these teen room design? Cool is not it?

Designed by Karim Rashid, this colorful holiday design house is a small prefabricated house design with only a basement and an attic and windows everywhere. This holiday house design has a cost of € 4000 by the famous designer and settled in three days. Of course, the most expensive furniture in the building, away from Karim, since all the furniture and accessories each has been created by him. And his style is recognizable at a distance, its colors and whimsical curves.

In fact, the second home of Karim resembles the first, one in New York. We also find in this case, like the Butterfly chair for Magis, or groundwater Tricolor inspired by a pool. The walls are decorated with paintings of Karim's wife, Megan.

Here, I will continue my story, which began three days ago. I showed you some pictures with the ideas of modern design. The next set of images can be seen here:

In this collection, I have chosen the geometric patterns. If you look closely you will notice the geometry is presented in the rooms. In addition, you can see the Asian influence in the line of decoration. Please let me know if you find them interesting.

All wood design inspiration interior space below is designed by Marc Canut. Home accessories generous wood creative ideas is what makes this series here and meticulous designer shows how wood can be versatile and beautiful. Who knew that the issue was so minimalist interior wood, however, the importance of natural beauty in every room of your house? Many people know that the wood has always been one of the main materials used often in the space of interior design and architecture. Because not only is valuable for its longevity but also for its versatility. And he knows how to make a room completely while using the right way.

In general, the interior wood would a gel rather than through the wall up to the wooden interior color white. Other than in some way this only works with this idea. Wooden floors and modern wooden shower stand-align the egg-shaped bathroom fixtures and 4 leaf clover on the wall of this nature-inspired bath with a simple furnishings. It is actually the tree is able to create a dining room look elegant, a little 'rustic and modern, yet elegant and polished. And 'sophisticated but practical enough for a small or a large kitchen. Yes, the tree will add a small piece of the edge of the retro-futuristic style of the drawing room and hallway.